Posted
by
michaelon Wednesday October 30, 2002 @12:45PM
from the fine-to-be-paid-in-gold-coins dept.

kyz writes "The BBC is reporting that the anti-trust branch of the European Commission has fined Nintendo 146 million euros (roughly $143m) for preventing its distributors from selling games as cheaply as they are sold in other European Union countries. For example, "prices of Nintendo products were up to 65% higher in Germany or the Netherlands than in Britain".
Now if only the EU could do this with Microsoft, Levi Strauss and the MPAA members..."

Lets see, they just lost $143 million dollars? So now, is this going to make them drop the prices in the other countries or raise the prices in the countries that were getting the games at good rates. I wonder.

Nintendo will begin a series of pay cuts and layoffs that will save them $143 million this fiscal year. It won't hurt the bosses who violated anti-trust laws one bit. When they fine corporate robber barons, it always gets passed on to the little guy. They need to throw them in prison.

actually, I heard that the bricks of the Nintendo Complex in Japan are engineered pretty cleverly.
If you take one and smack your head into it, a coin pops out of the other end.
They'll have the cash in no time.

Does anyone else remember getting a check from Nintendo (in the late 80s) for like $5 or $10? Apparently they were price fixing the NES Unit for $99, and were order to pay a fixed amount to every registered NES owner.

You got better than we did. The AG here in Texas just completely blew it when he won our suit against Nintendo. Every Nintendo owner in Texas received a nice shiny new COUPON for $5 off your next PURCHASE of yet another overpriced game.

This is like telling a murderer that they are free to go, but have to give the police a 5-minute warning before the next time they kill someone.

Wouldnt it be great if the money fined went to all the people across europe who had bought all these high priced games!! Though I think thats unlikely to happen as it will no doubt go into the bottomless pit of the EU.

In the end the end user ends up paying this fine as although prices might come down in europe they will no doubt go up in the UK.

Disclaimer: I am not one of those people you see protesting around every IMF meetings

With that said, I swear to god, multinational cooperations have no conscience. Turn on the news, and all you see is the Enrons, Microsofts, and all these other coopertions who do everything they can to screw the consumer and their employees to make an extra penny. Good for the Europeans, bout damn time someone smacked those companies down, even if it is one with good Karma like nintendo.

It's just a symptom of a much bigger problem. The global economy has reduced the importance of national laws. If you don't like the laws in the country where you operate, moving has never been easier. Child labor laws? Move to Cambodia. So it makes my day just a bit brigher when I see them getting smacked down for it. But, I would much prefer to see a $143 billion instead of million. That would get their attention

Disclaimer: I am not one of those people you see protesting around every IMF meetings. With that said, I swear to god, multinational cooperations have no conscience.

If the protesters around IMF had their way, there would be much more trade barriers between countries, making it much easier for corporations such as Nintendo to set different prices in different regions.

Good for the Europeans, bout damn time someone smacked those companies down, even if it is one with good Karma like nintendo.

Hum... so if the market is not very competitive you propose knocking down the companies. I think the opposite - what is needed is more companies. And, this is exactly what has happened in the video game market. With three competing systems it is probably very difficult for Nintendo to rig prices, not because EU bureaucrats tell them not to, but because they would lose their business.

It's not an anti-competitive market in this case, as you point out. The video game market is about as cut-throat as it gets.

With that said, every one of these scandals where companies are found out to be breaking the law in order to increase the bottom dollar makes me want to start levying incredibly excessive penalties, as a way of "encouraging" the other companies not to even think about this crap.

The only thing that will have any impact on dirty corporate behavior will be serious fines (eg, 50% of illegal gain) and serious jail time levied against the *individuals* responsible for the corporate crimes.

Whoever makes that price-fixing deal in Europe ought to be paying $143M out of pocket as well as facing 5 years in a hard-core, anal rape kind of prison. I'd even throw in manditory termination without severance from whatever company they worked for, with lifetime banishment from the industry.

It used to be that shifty behavior by a corporation earned some negative reproach from the corporate community, which acted as a brake on the behavior.

Nowadays there is no reproach. These guys have an army of lawyers they consult beforehand and they know the potential fiduciary liability up front. They build in the liability to their overall pricing structure as insurance against getting caught -- if they don't get caught, it's just extra profit margin. If they do get caught, the cost is taken care of and the only "reproach" is to guys that get caught too often and can't cover their fine losses against the built-in "insurance".

Having a 50% penalty on illegal gains is actually an enducement to break the law. Let's say I can make $4N ethically and legally, and $6N by screwing my customers. That would mean that my illegal profits are $2N; 50% of which would be $N. This means I'd still be making $N more by breaking the law, even after being "penalized". Triple damages are far more appropriate in this situation. Using the same numbers as before, my penalty for breaking the law would $6N; giving me a profit of $4N for playing nice and $0 for being a bastard.

serious jail time levied against the *individuals* responsible for the corporate crimes.

Whoever makes that price-fixing deal in Europe ought to be paying $143M out of pocket as well as facing 5 years in a hard-core, anal rape kind of prison. I'd even throw in manditory termination without severance from whatever company they worked for, with lifetime banishment from the industry.

So let me get this straight. You're saying that if a foreign country doesn't like what your company is doing, then they should be allowed to extradite you to their country and punish you as they see fit?

So, if your product is sold in Libya, and Libya thinks that your "action figures" are offensive because the women aren't covering their faces, you'd have no problem with the US packaging you up and shipping you off to Libya, to spend the next 5 years in THEIR prison, after losing all your assets and being banished from your job, because you had the moral contempt to actually manufacture an idol of a female who is not covering her face?

Maybe at the smaller level, yes. But I swear, the bigger a company gets, the more evil it gets. Seriously, once they get big enough, they don't feel compelled to obey national laws anymore, and I think it's high time someone let them know that that isn't the case. I am sure there are big companies that do good things, but the only reason they are doing it is so people will give them positive brand-name recognition.

You're making unsupportable generalizations here, you know that? Boeing, Home Depot, Fannie Mae, State Farm, Morgan Stanley, Target, P&G, Berkshire Hathaway, Safeway... these companies are all in the Fortune 50. Please list your complaints against each, in as much detail as possible, so we can all accept your assertion that big companies are automatically evil.

First of all, what mailing list is that, exactly? I'm not sure I believe that's an accurate representation of the facts. Phrases like "small army," "homeless encampment," and "international call for solidarity" make it pretty clear that that's a heavily biased report.

But most importantly, there's nothing evil about this, for several reasons.

1. Home Depot was ordered, by the Ontario Ministry of the Environment, to evict the squatters (not "homeless encampment," but squatters) in November, 2000. The order was based on the premise that the vacant lot was formerly the site of an iron foundry, and not fit for direct human habitation.

2. In December, 2000, Home Depot put flyers all over the squatters' tents saying that they would be clearing the site and asking people to leave. That pretty much blows your "with no notice" theory out of the water.

3. In August, Home Depot actually starting building shelters on the site in preparation for winter. Does that sound evil to you?

There's even more to the story. A good-- and unbiased-- synopsis can be found on the CBC's web site, here [www.cbc.ca].

With that said, I swear to god, multinational cooperations have no conscience. Turn on the news, and all you see is the Enrons, Microsofts, and all these other coopertions who do everything they can to screw the consumer and their employees to make an extra penny. Good for the Europeans, bout damn time someone smacked those companies down, even if it is one with good Karma like nintendo.

On the contrary, multinationals are only operating within the framework provided by national governments. When governments dismantle their trade barriers, such as import tarriffs and quotas, then price differences will simply be arbitraged away by brokers (i.e. you see something selling for $10 in country A and $5 in country B, export/import it and sell it in country A for $6 - eventually the margin will tend to zero). But that can only happen if there are no obstacles to freely moving goods and capital around.

The biggest barrier to this is ironically the EU itself who protect manufacturers like Levi Strauss from UK retailers who source overseas and want to sell at less than Levi's MRRP. Not to mention the distortions the EU create in the market with their subsidies of inefficient industries.

Frankly, I don't know who's worse, corrupt corporations (as distinct from well-run corporations) or corrupt politicians - and the EU isn't even democratically elected! A shareholder has far more influence on a company than a voter has on the European Commission (that's a fact).

The EU [eu.int]
is run by five institutions, each playing a specific role:

* European Parliament (elected by the peoples of the Member States);
* Council of the Union (composed of the governments of the Member States);
* European Commission (driving force and executive body);
* Court of Justice (compliance with the law);
* Court of Auditors (sound and lawful management of the EU budget).

I trust that you'll believe me if I told you that the goverments of the member states are democratically elected.

The comission [eu.int] "has a college of 20 members. The President, the two Vice-Presidents and the 17 other Members of the Commission are chosen for their general competence, and all present guarantees of independence. They have all held political positions in their countries of origin, often at ministerial level.

The Commission is reappointed every five years, within six months of the elections to the European Parliament. This interval gives the new Parliament time to approve the Commission President proposed by the Member States, before the President designate constitutes his future team, in collaboration with the governments of the Member States. Parliament then gives its opinion on the entire college through a process of approval. Once accepted by the Parliament, the new Commission can officially start work the following January. "

That's ok for me, so let's go on to the Court [eu.int]
The judges and the advocates-general are appointed by joint agreement of the governments of the Member States for a renewable term of six years, with partial reappointment every three years. These are members of the highest national judiciary or jurisconsults of recognised competence presenting all the guarantees of independence.

Again, it sounds good to me

Finally, The Court of Auditors [eu.int] comprises 15 members appointed by the Council for a renewable term of six years, ruling unanimously after consultation with the European Parliament.

So the main bodies of the EU are either elected by the people or appointed by elected officials. I really don't see what your problem is.

I agree with you for the most part; that being said, I think there are two things to keep in mind. First of all, corporations exist solely for the purpose of making money. If the opportunity presents itself, then so shall it be done. (American) CEOs can be sued if they take an action that is not in the best interests of the company('s bottom line, presumably).

Also, of course you only hear about screwy corporations on the news, just like you only hear about terror attacks in Israel/Palestine, or hostages in Moscow. CNN wouldn't attract a lot of eyes if its headlines ran 'Corporation continues ethical business as usual; 30 people on bus in Jerusalem get where they're going without incident; 700 theatre patrons watch play without interruption'. Much though I wish that were all the news there was to report, people are attracted to news about death, corruption, greed, and so on, so when four Israelis die, they focus on that, not the five million that didn't; when corporations cheat, they focus on those, not the ones that did the math right, and so on. For that matter, every time people get together to protest globalization, we end up with riots, assaults, property damage, and so on. Can we really judge all anti-globalists based on those few? Can we judge all multi-nationals based on those few? I don't think so.

...that as part of the ruling, the head executives of the branches of Nintendo International concerned with this case will have large barrels hurled at them by a giant ape while trying to get up several stories of floors. In a press release, one of the executives said simply, "BEEP."

It makes perfect sense if you understand the context. First, the EU commission has realized that there is a huge market for investigation. They've set penalities for food, steel, clothes, they feel have not been priced accordingly. To me, it looks like the international version of a class-action lawsuit: sign up some clients, shake some trees, get a settlement or fine. I agree with your point, a game is not food, air, or water, you have the right NOT to buy if the price is too high; apparently it wasn't since they sold well.

No, what they were doing is telling their *distributors* what they could sell 'em for. The thing is, at least with real merchandise (as opposed to say, software), when you buy something, you own it, and can sell it for whatever you'd like to sell it for.

The EU (rightly) seeks to punish vendors that (a) charge different prices in different markets, and (b) restrict imports from other EU countries. (a) is legal, but (b) is very much illegal. Free trade means if your console is cheaper elsewhere, you can buy it there.
Imagine if consoles were cheaper in Utah, but any Utah resellers were forbidden to ship them out of state.
The EU suffers from too much of this kind of stuff.

If Nintendo sells units for more money in a country with less demand, it's illegal?

Not what the ruling's about. The ruling isn't about price per se, it's about controlling the distribution.

What Nintendo were doing was selling a game for x in the UK, and the same game for x+5 in, say, France. Perfectly legal.

The trouble is that they were then trying to prevent French consumers from buying in Britain and importing directly into France. Now, the EU is an internal free-trade area, so controlling imports between member states is a big no-no.

That's the case. Not the price as such, but the control of distribution across member state boundaries.

Presumably because all of Europe is under one DVD region. The EU's purpose is to handle things between it's different member states, it has no authority over trade between EU states and other non-EU states, or at least not the same level of authority.

is a pretty bad simplification. There is a great demand for cheap bread, but that doesn't mean cheap bread is expensive.

What offer vs. demand means is that you have two curves, the demand curve and the offer curve. The demand curve is a hyperbolic shaped x-demand/y-price curve: few people want to pay a high price for a good, many people want to pay a low price. The offer curve has the inverse behaviour : many suppliers want to supply high margin goods, few are willing to suppl low margin goods.

We live in a world where there is demand AND offer so the demand and offer curves are plotted on the same chart. As one is rising from 0, and the other is faling to 0, so they must cross at some equilibrium point, the one where the transactions do occur. In fact it is not a point, it is broader, if I enter in a shop and my Coke is.75 euro instead of.70 euro I will buy it anyway.

Fluctuations in offer or demand are translated to the correspondent curve going up or down, setting a new equilibrium point. This is left as an exercise to the reader.

People have already mentioned their price fixing the NES, but how about their security chips and their rabid hate of Tengen? And then there's the Game Genie and how Nintendo did their best to put Camerica out of business.

Nintendo just ain't cool when it comes to anything that lowers their share of pocketbook abuse. Always has been, always will be.

Hrmm....I thought what killed their competitors was a) awful battery life on the color handheld systems and b) a lot of mediocre software. People kept buying gameboys because of its excellent software library and that you could play it for more than 2-6 hours before the batteries died out.

Seems like the EU is coming down on other [bbc.co.uk] business [utopiasprings.com] sectors [eurunion.org] as well. It is about time someone cleaned up the imperfect markets that still prevail in europe.

They will fine the DVD consortium for region coding. I'm sure that it's cheaper to buy american DVDs than the the euro ones that are likely released much later.

Yes, for years I have been buying Region 1 disks from the US/Canada at half the price, months before local release (often before cinema). Often the special features are better as well, due to licensing restrictions etc.

That is price fixing, and is a major factor in why they wanted region coding in the first place.

Doesn't Nintendo, or any business entity for that matter, have the right to sell their product to whomever they choose. If they don't want to sell it to a guy who will turn around and sell it for a higher price, they should be able to do that. Their (Nintendo's) motivation is obvious (to make money).

It seems like it has more to do with the open trade policies within the EU than it does with Nintendo.

It seems like it has more to do with the open trade policies within the EU than it does with Nintendo.

You're absolutely right. Unfortunately, it has lately become fashionable to hate corporations. Personally, I find it mind-boggling that someone can hate a corporation but NOT hate government for the same reasons. My government takes 55% of my income EVERY year. Compared to that, Nintendo isn't even a minor concern.

Let me just say, damn I wish I was in your tax bracket. And no I don't feel sorry for you at all. People need to pay taxes so we have things like roads and schools.
I hate monopolies, I love competition. Certain types of price fixing is a crime. Criminals suck. The gov't is not a bunch of criminals for taking your money. They are doing things that benefit society with that money. Ever drive on a public road?
You tax rate is prorably so high because your income is high and whatever country you live in was wise enopugh to institute some sort of progressive tax system. If you don't like having a gov't you should find a place where you can live among fellow anarchists. You can grow your own food and carry a gun everwhere you go, while watching you standard of living go to shit.
I personally believe that at some level of income, the tax rate for individuals should become 100%. No one person should have a billion dollars, it's impossible for a democaracy to exist when people do. The economy would still function just fine under this system, since indiviuals could still pool their money by creating corporations.

I personally believe that at some level of income, the tax rate for individuals should become 100%.

I agree, with a slight adjustment: $100 million. Damned if I can find the link, but some bored accounting flak did an article for Newsweek about Billy G a while ago. It concluded that you could take away all but $100 million from his portfolio, and his lifestyle would not change one iota. That's literally the limit of tangible wealth; after that, it's just keeping score against the other fat cats.

Anyone here notice yet that the popular opinion on this discussion is that who does the damned EU think they are to regulate how Nintendo can sell their product; whereas on SuSe Linux will run Microsoft Office [slashdot.org], it's all about how MS is an evil monopoly that needs to be regulated?

First, some information. The decision wasn't made based on how Nintendo wants to set prices. All you free-traders are right - they can do whatever they want. However, the laws they admitted to breaking concerned their price-fixing, not their pricing, ie their strong-arm tactics in preventing distributors from selling their products in countries where Nintendo wanted to price them higher. This is exactly not free-trade.

A couple of thoughts:

(1) There are completely different people making the arguments. None of the free-traders are hanging out on the SuSe Linux discussion, but they're coming out in numbers here.

(2) The/. crowd loves busting on Evil Devil-Worshipping MS but will defend to the death their Beloved Happy Shiny NES, even though the actual differences in behavior might be quite slim.

(3) ?

That's what I love about slashdot. The diversity of the uninformed opinions... =)

I guarantee you get a lot more return for your money from the government (which isn't hell-bent on taking off a maximal ROI from every taxpayer dollar it collects) than you do from a corporation, which always wants its 15%+ profit.

Or don't you like roads, electrical grids [usda.gov], and all that other good infrastructure and all those wonderful services? Me, personally, I like paying taxes [slashdot.org].

Coincidentally enough, I don't think people hate corporations for the same reasons they hate governments. It's not about the money corporations take away, it's the exploitation without accountability (or transparency) -- unless you are a shareholder, you cannot vote a corrupt CEO out of office. I am acutely aware of this paradigm, because there are US politicians who somehow directly affect my life and whom I would dearly love to vote out of office, and I'm not a US citizen.

While I agree that Nintendo's price-fixing is a non-issue as issues go, it's still worth a weather eye, much as many other things are. I'd hate to be serious and uptight all the time.

The problem is that Nintendo also controls the price of 3rd party games, so Capcom can't undercut Nintendo's own games. This creates a very monopoly-like situation because you have your game system and one company controls all the software you can use on it.

If it were cheap to switch to another system I'm sure game prices would be down accross the board, but once you're locked in with a big system investment, you either pay high prices for games or have your investment sit there doing nothing.

I don't see why the EU get's to benefit from screwing consumers. Why not let the consumers screw the company by not buying the product, or ordering it from somewhere else, or otherwise avoiding the price gouging? Is the EU going to give the money back to Germany and the Netherlands to the consumers who got ripped off? I don't see how the EU is doing the right thing.

When is a market unfair? When is it unfair for a company to set a price for their products? If I offer to sell you a video game for $50 or for $100, then isn't it just a private transaction between the two of us?

Now, if I want to sell that game to someone in Britain for $50, and someone in Germany for $100, is there something wrong with that? After all, can't the German customer just call up someone in Britain and have them buy it for him and ship it to Germany, and pay him the $50 plus a bit for his troubles?

Perhaps the problem here isn't Nintendo. Perhaps the problem is government laws that prevent the free exchange of goods across borders, or government fees and taxes that discourage cross-border trade, and enable companies like Nintendo to pull stunts like this.

Exactly my point. In a free market, there will always be someone willing to provide such services. If people are unable to do so, then that is the case because EU laws/tarrifs/regulations/etc. are the problem. Maybe the EU should fine themselves.

Here's the tough part: If Nintendo, operating in a free market, can manage to sell to some customers at a higher cost than others, then more power to them.

In a free market, there will always be someone willing to provide such services.

No.

Nintendo were leaning on the retailers to ensure that anyone supplying to a cheaper country suddenly got their supply of Nintendo games cut off. There was no-one willing to do this. The second you did, you lost all rights to sell Nintendo stuff.

If people are unable to do so, then that is the case because EU laws/tarrifs/regulations/etc. are the problem.

Exactly the opposite. The EU has laws that enable people to do so and these laws have been used against Nintendo, who were trying to prevent it.

DVD's have a built-in way to enforce trade restrictions: region encoding. Of course, film distributors will claim it's about release dates or other such crap; but in reality, region encoding was always intended as an anti-free trade measure.

The distributors want to extract as much money as they can from each market: while they can easily get $18 for a DVD in the US, that would be way too high in China.

The way to scuttle this is to reform copyright to be free trade- and fair use-friendly: demand that, as a condition of receiving copyright protection, distributors not cripple the product in any way---no "copy protection," no region encoding, etc.---and allow users to buy and sell and resell them as they please, and to make copies for archival purposes or for limited distribution to friends. (Note: Your 10,000 closest friends on Gnutella don't count.)

OTOH, if the distributors want to put in anti-free trade or anti-fair use measures, they obviously don't need copyright protection. (LOL)

The point of this proposal is simply to shift the balance back to the center, away from the veritable power orgy for content owners that exists today. Reasonable people realize that copyright, patent, and trademark protections exist for a reason; reasonable people do not believe that these protections should come at the expense of all liberty for users.

The distributors want to extract as much money as they can from each market

Those bastards! I suppose you work for free then? I suppose you believe that investors should just randomly invest their money in companies, rather than favouring those who tend to turn the biggest profit? Perhaps in your view, we should do away with the whole concept of "money" altogether?

DVD's have a built-in way to enforce trade restrictions: region encoding. Of course, film distributors will claim it's about release dates or other such crap; but in reality, region encoding was always intended as an anti-free trade measure.

The distributors want to extract as much money as they can from each market: while they can easily get $18 for a DVD in the US, that would be way too high in China.

I find it amazing that people don't see the hypocrisy of the positions of the corporations. By people, I assume the general population. Most slashdotters seem to see through the bullshit. I don't understand what it is okay for corporations to exploit lower costs (in most cases standards) of living to produce products for more wealthy consumers in North America, Europe, Japan and Australia, but will do all that they can to stop those wealthy consumers from purchasing items from the same developing countries.

Normally, I am a commie pinko bitch, but this time, the I feel the free market would level the playing field. I would love to see corporations undercut by cheaper products (ie products less focussed on branding) from other countries the way they undercut the cost of labour with cheap labour from other parts of the world.

not that i am a big fan of nintendo, how could the EU enforce a rule that the price of anything sold has to be the same across the EU states. In that article they compare the price of cubes sold in Britain & Germany. Does this essentially mean that the services (shipping, handling etc)would invariably cost me the same in germany & Britan ?

More over, there could always be the additional language barrier & translation costs for the cubes or any other product. Wouldnt it be a valid argument for price hike from nintendos side ? (although 65% is a little too much)

Of course they can charge what they want. What they can't do is intimidate people who want to buy it where it's cheaper and sell it where it's more expensive. Now, since their intimidation was limited to reducing the allocation (in some cases to zero) to companies involved in the grey market, I think it's a little bit of a grey area [haha].

This is interesting because it's not that long ago that exactly the opposite was decided in the case of Tescos selling grey market Levis. But I think that was a UK court, not a EU one.

charge what they want? If its overpriced, tehres one simple answer: dont buy it. Its not as tho these products mentioned (anything by nintendo, Levi, Microsoft etc) have anything to do with practical and normal living needs?!?! Now, if this was against a supermarket or a foodgoods seller, then fine, but in this case i dont agree.

Firstly, its their product, why cant they decide how much they want to charge? The value is only that of what people are willing to pay, people stop paying and the product obviously isnt worth what they are asking.

Secondly, as i said before, its not a vital product. All of these things are luxuries, and definatly things we can live without.

Priorities people, want to go after a price fixer? Then go after the Pharmacuetical Industry who definatly fixes prices! That sort of battle would benifit more people than this.

Coincidentally, I've just finished reading this book [amazon.com], which gets into the original court case in the US. It's a very interesting read (although it's not so good at the very end). Unfortunately, I think it may be out of print.

You have avg income differences, and most important consumer diffences and market penetration differences.

Prices should not be the same in each country, as these conditions are not the same.

If i live in Germany and i see prices are cheaper in the uk i simply buy in the uk, that is what online stores are for. Granted, this would also make the price difference pointless but i bet that online sales for nintendo games (bought mostly by parents) is less than 5%

As someone who lives in the UK, the fact Nintendo were price fixing doesn't surprise me in the slightest. The fact they were fined does though - given that despite the fact that it's glaringly obvious that UK Brits are systematically ripped off on everything from Cars to Computers compared to our European counterparts - very little action is taken.

Some facts:

Average Family car in UK- £12,000
Average Family car in Holland - £9,000

To fill an Average family car with petrol in the UK costs £50 or $80
To fill the same car with petrol in the USA costs £15.07 or $24.11

given that despite the fact that it's glaringly obvious that UK Brits are systematically ripped off on everything from Cars to Computers compared to our European counterparts - very little action is taken.

Well, duh, who do you suppose is doing the ripping off? Of every pound you spend on petrol, 80p is tax - that's a 400% tax! A pack of cigarettes costs something like 25p to manufacture - and you're paying 15x that in tax!

And everyone pays, even non-drivers - because everything is shipped by road, it just gets factored into the price of loaves of bread. And, despite what the propaganda tells you, the NHS would be well and truly shafted without money from cigarette taxes - the government really wants more smokers, not less. After all they are the perfect citizens: they voluntarily pay more tax their whole lives, then die before they collect their pensions!

Parliament will take no action on rip-off Britain because they are it's biggest fans! And that's why in the past Customs have been so heavy handed with "booze cruisers" - it's only because of recent public outrage and the impossbility of comprehensive enforcement that the rules have recently been (slightly) relaxed.

While I know that prices in the UK are usually high, the figures quoted are irrelevant for a simple reason: if you're going to compare, compare against one country, and take things into account. The UK taxes cigarettes far more than most countries do (as I recall) - are taxes an issue? Germany is famous for its beer - is the beer in both situations made by the same company, so that you're having a fair comparison of products? If so, what about shipping costs and so on?

Even here in Canada, you can get a pre-cooked shrimp ring for about $9.99 in BC, $8.99 in Saskatchewan, and $4.99 in New Brunswick, all the same brand. You can also get $10 shrimp rings in New Brunswick from more widely known (i.e. larger, better) brands. Is this because people in BC get 'screwed', or because it costs a lot of money to ship refrigerated shrimp ten thousand kilometers?

If you're going to compare, you have to take more factors than just the price into account - local economy, shipping, VAT, local taxes, and so on. Is the US getting screwed because a BK Whopper costs more there than here? No, we just have cheaper beef, and a lower (but stronger) economy, so prices are less. It's good sense, and sensible economics.

Very good example. It's usually cheaper to have the car personally imported than to buy it direct from the factory. That same car has had additional costs imposed by the manufacturers own shipping, followed by your own return shipping arrangements and relevant documentation etc.

I remember hearing a lot about the car companies being in trouble over this practice, and they were told to stop it. Little has changed by the look of it.

How can price fixing even make business sense (legal or not) for Nintendo? Nintendo is definately not a monopoly, so you'd think that price fixing games would just drive more customers from the Gamecube to the PS2 or (gasp) XBox.

For example (and for argument's sake) why would a person spend $60 for a game when they can get the exact same game for PS2 for $40? (Notwithstanding the difference in the cost of the hardware - which at roughly $50 evens out at about 3 games. Who only ever buys 3 games for a console?) You'd think that this scenario would simply hurt sales, and not increase profit. Unless of course, they only care about short term gain and higher profit margins and not increasing market share. Makes sense in the short term, but kills you in the long term.

Sounds to me that not only is Nintendo guilty of price fixing, but that they're guilty of having a somewhat flawed business model.

The Register is carrying another story here [theregister.co.uk] with evidence that Nintendo expected a far smaller fine - around 50M. An interesting read that'll make you think twice before publishing MSWord docs to all and sundry:-)

What strikes me is that there is something of a double standard in play here.
The EU makes no attempts to make sure that it costs the same amount to advertise
a product in different EU markets, or that it costs the same amount to get a
product on the shelves in each, but it does use fines such as this
one to make sure that a producer can't charge different prices for the same item
in different places.

As far as I can tell, this will tend to make profit margins necessarily higher in
some EU markets than in others, with the result that either all markets will get
more expensive, or that producers will stop selling in some markets.

In other words, if it costs Nintendo more to operate in the Germany than in the UK,
and if they are prohibited by law from charging higher prices in Germany than in the
UK, then their only options are a.) to not sell their products in Germany at all, or
b.) to charge higher prices for their products in the UK.

If the goal of this legislation is to stiff the Brits or to reduce the number of products
the Germans have to choose from, it would seem to be working quite well, but if it's goal
is to make the product cheap everywhere, it's hard to see how it could possibly succeed.

We are discussing the double standard between the lack of regulation of the price at which
a company pays for services and regulation of the price which it charges for its products.

Production is only a small part of this picture. While it is probably true that Nintendo makes
games in one place and ships to both the UK and Germany from there,
are many other prices which cannot be paid anywhere in the EU and shipped -- the
price of advertising on German television stations, the price of getting shelf-space in German stores and so forth.

So again, if you make the only way for Nintendo to recover these costs be raising
prices in the UK, they will either do so or they will abandon their interest in
selling in Germany (as some other companies have done). In the one case, the British
consumer loses, by paying more for the game than he had been paying. In the other case,
the German consumer loses by not being able to buy a game he could have bought before.

Everywhere I go, video games cost the same. I've never seen them go down in price until they hit the "we need to get rid of this junk" bins.
Why isn't this price fixing? Or is it? Sure looks that way to me.

The Ninentendo case is an example of price discrimination not price fixing.

Price discrimination is when a single producer charges different customes different prices. Price fixing is when different producers agree to sell to all customers for the same price.

What followes is some detail on each and then some argumentation for why the ethical case against price discrimination generally is weak, without adressing the Nintendo case particularly.

Price fixing is an instance of collusion, where ostensibly competing producers negotiate an agreement to restrict price competetion between themselves. That is, producers agree not to sell their product for below some specified amount. The purpose of the agreement is to increase sales profits by rasing sales prices. Note that such agreements are always accompanied by another agreement about how producers divide up the market. Sometimes producers carve up the market geographically. For example, "You sell in Michigan and I'll sell in Ohio." Sometimes producers carve up the market by number of sales. "You won't sell more than x billion barrels of oil and I won't either."

OPEC is the quintessential example of a price fixing organization. Price fixing is its sole and explicit purpose. (OPEC can do this because it is an organization of governments, and there exists no super-governmental body to place on governments the same rules by which those nations govern their citizens.)

Price discrimination, on the other hand, is a pricing strategy of a lone seller for raising profits on sales without organizing agreements with his competitors. For each buyer, the seller attempts to negotiate the maximum price that buyer will pay. For the seller, this stragy works to raise net sales income above what would be obtained with a one-price-for-all strategy.

The moral case against is price discrimination is pretty weak for these reasons:

-Because richer customers are willing to pay more, in practice price discimination amounts to giving poorer customers a break on price. It places the costs of production more heavely on those who can best afford them. If you look at Nintendo's pricing scheme, I would predict you find that Nintendo charged more in richer countries and less in poorer countries. -Most people don't regard price discrimination as unethical. There are plenty of examples which demonstrate how this is cool with most people. Like Priceline's "Name your own price". Or the bazaar, where buyers and sellers haggle over prices, the buyer attempting to determine the lowest price at which the seller will part with a good and the seller trying to find the highest price which the buyer is willing to pay. There is no guarantee or even an expectation that such a system will result in the same price for each customer, and that's just cool with everyone.-With progressive taxation, tax payers are assessed different fees according to their ability to pay. With price discrimination, buyers pay different fees according to their willingness to pay. Goverments make the "Different people pay different amounts" argument in the case of taxation. However, the argue against "different people pay different amounts" in the case of private sales. The reason for the contradictory approaches is that with taxation, goverment is as the recipient of tax revenues adopts the strategy which maximizes those revenues. In the case of corporate sales, they have little such insentive. My point here is not that one or the other is eithically correct, but that it is difficult to make the ethical case for one as you engage in the other.

With price discrimination, the rich lose out becasue sellers can exploit their willingness to pay more than the poor. Mario Monte stands for their interets here.

A lot of people here are writing "why can't they charge the same across Europe". THIS IS NOT THE ISSUE.

Nintendo have been found to have formed a cartel with their distributors - who have also been fined a LOT of money. The EU decided that the distributors along with Nintendo had fixed prices among themselves. This means that there is no price competition on games (there can't be). This kind of thing happens a lot and a lot of people getted spanked when it happens. The car industry was famous for it for quite a while.

Apart from that I think fining the Big N is rediculous. I was an owner of a SNES and am the owner of an N64, GBA and Gamecube. Where does 150 million go??? Well - it comes from Nintendo so I guess as a paying customer I'll have to help Nintendo recoup costs.

There must be more elegant solutions than this - if the consumer was ripped then the consumer should be repaid. Not the EU. Free games!